The Hindu Business Line : CG Igarshi to allot shares, warrants to Aeneas Evolution on pref basis

THE Chennai-based CG Igarshi Motors Ltd has announced that the company would issue 8.55 lakh equity shares on preferential basis to Aeneas Evolution Portfolio Ltd, a global equity investment fund, for a price of Rs 180 a share. Aeneas will also be issued another 8.55 lakh optionally convertible warrants for Rs 18 per warrant. The warrants are convertible into equity shares within the next 18 months at a price of Rs 180 a share — the investor will pay Rs 162 for each share at the time of conversion.

The deal is structured like this: in the first tranche, Aeneas Evolution will pay $3.5 million for 6.7 per cent stake in the company. The investor will also pay about $300,000 for the warrants. This sum will be forfeited by CG Igarshi if Aeneas does not convert the warrants into shares.

If and when the investor wants to convert the warrants into shares, it will pay $3.2 million. If all the warrants are converted into shares, Aeneas will end up with 12.5 per cent stake in CG Igarshi for its $7 million investment.

CG Igarshi Motors manufactures micro motors, mainly for automotive applications. These are products that are used, for example, in power windows. The company's turnover in the first nine months of the current year was Rs 75 crore, compared with Rs 50 crore for the full year 2003-04. The company has its production facility in the Madras Export Processing Zone and over 90 per cent of its production is exported. But the company has plans to raise supplies to the Indian market to 25 per cent of the (growing) turnover in the next three years.

According to Mr P. Mukund, Managing Director, CG Igarshi, the company needs money to fund its $7-million investment plans for the next year. The promoters Igarshi Electric of Japan already hold 74.99 per cent stake in the Rs 11.90-crore paid-up capital of the company.

An infusion of capital from an equity investor was found an attractive option. "They are clean investors," commented Mr Mukund. The shares allotted to Aeneas are locked-in for one year.

To accommodate issue of shares to the investors CG Igarshi proposes to raise its authorised capital from Rs 12 crore to Rs 15 crore.

An extraordinary general meeting of shareholders is to be held on April 7, to secure shareholders' approval for the proposals.

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